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Thursday, April 28, 2016

U.S. Senator Claire McCaskill sharply questioned officials and investors of Valeant Pharmaceuticals about the company’s business strategy—which relied upon aggressive corporate acquisitions and price hikes. The hearing also included testimony from individuals and experts who explained the negative impact for individuals caught in Valeant’s ‘price-gouging’ practices.

“You can try to dress up this business model with good sounding phrases but (the model) is simple...give the companies that develop a drug that has little to no competition a healthy profit, fire the scientists, and jack up the prices as high as you think you can get away with,” McCaskill said. “It’s using patients as hostages. It's immoral. It hurts real people. It makes Americans very very angry. In case you haven't noticed that has real ramifications in our political process and could lead to an instability of our government, our economy, and our standing in the world. Pigs get fed, hogs get slaughtered. It's time to slaughter some hogs.”

Valeant consistently acquired pharmaceutical companies that were the only producer of off-patent drugs, often then slashing the research and development spending for those companies and raising the prices on their recently-acquired drugs by hundreds or thousands of percentage points. Valeant’s entire research and development budget was consistently below 5 percent of their total sales—dramatically lower than most other companies in the pharmaceutical industry.

One of the witnesses Berna Heyman, who had lost access to the drug Syrine, which is used to treat Wilson’s disease after a dramatic and sudden price increase said, “I’m very proud to see this (hearing) in action. That the committee agreed to look at this issue is doing something for so many of us.”

Today’s hearing was the third in the Senate Special Committee on Aging’s investigation into pharmaceutical drug pricing. TheCommittee’s first hearing of the series, in December 2015, examined the effect dramatic and sudden price increases of prescription drugs has on patients and providers. The second hearing, held on March 17, took an in-depth look inside the monopoly business models of Turing and Retrophin, both formerly headed by Martin Shkreli.

This year alone, Americans are expected to spend more than $328 billion on prescription drugs. Of this amount, individuals will pay about $50 billion out-of-pocket. The federal government will pick up another $110 billion in payments through Medicare, Medicaid, Veterans Affairs, and other programs.

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